The ongoing conflict between Russia and Ukraine has had a lasting impact on the African food market, given the significance of both countries in the supply chains of many vital commodities such as wheat and sunflower oil. This has resulted in food shortages and inflated prices, owing to the dependency that most countries on the continent have on products from the Black Sea Region.
Many African countries import most of their wheat and grains from Russia and Ukraine. Djibouti, Togo, Burundi, Cameroon, Rwanda, Mauritania, Senegal, Congo, Tanzania, Libya, and Namibia all rely on the warring sides for about 70% of their wheat imports. Meanwhile, Madagascar and Egypt import close to 80%, Somalia purchases more than 90% of their wheat requirements, and the entirety of Eritrean grain supply originates from Russia and Ukraine. Consequently, between 2017 and 2019, African wheat imports rose by 68% to 47 million mt. According to the African Union Development Agency, wheat consumption is projected to reach 76.5 million mt by 2025, with 63.4% imported outside the continent.
South African alone imports an average of 1.8 million tons of wheat annually, with 38% originating from Russia and Ukraine. This shortage of black sea wheat in SA has had major effects on domestic prices. The South African domestic spot price of wheat increased by 25% to ZAR 6,771.18 (USD 374.97) per ton in July 2022, compared to ZAR 5,430.70 (USD 300.74) per ton in 2021, the highest on record, while sunflower oil prices rose by 72% YoY to ZAR 230.44 (USD 12.90) per 5 litres.
Source: Tridge, SAGIS
In August 2022, an agreement was reached by the UN and Turkey to open a safe maritime humanitarian corridor in the Black Sea (the Black Sea Grain Initiative) to alleviate the grain shortages caused by the conflict. Since then, over 600 ships full of grain and other foodstuffs have left three Ukrainian ports: Chornomorsk, Odessa, and Yuzhny/Pivdennyi. While unblocking the sea export route has helped to address the African food security crisis and lower grain prices, the export backlogs remain significant. As of January 2023, over 18 million mt of grain and other foodstuffs have been exported via the Black Sea Grain Initiative.
Russia and Ukraine are not only major suppliers of food products to Africa, they are also key markets for African goods. For example, Russia is the leading destination for Egyptian oranges. However, the conflict has resulted in logistical bottlenecks, limiting shipments to Russia. Fruit exports from South Africa have also been impacted, as Russia is a leading market for South African fruit, accounting for 7% of SA citrus exports and 12% of SA apple and pear exports. These countries have formulated strategies to alleviate the damage. One of those strategies includes finding new markets while consolidating existing ones. Besides Russia, Egyptian orange suppliers targeted other markets, such as the Netherlands and Saudi Arabia in the Middle East. According to Nidhi Kumari, an Engagement Manager for Tridge in India, the South Asian country has also emerged as a significant importer of Valencia oranges from Egypt.
In 2022, SA increased its exports of apples to China, shipping over a million mt, while SA pears entered the Chinese market for the first time pushing exports up by 16% YoY to 287K mt. Given that South Africa's pear harvest commences in January, the export window to China in 2023 will be longer than the previous year. This along with the increasing awareness of the availability of South African pears in Chinese markets could result in increased volumes this year. According to Hortgro, the leading deciduous fruit growers association in South Africa, this penetration of the Chinese market is expected to elevate SA pear exports by a further 10% by 2025.
Another lever in securing Africa's food systems is the African Continental Free Trade Area (AfCFTA) which came into effect on 1 January 2021 and currently includes 54 states. African countries can benefit by taking advantage of the world's largest free trade area, which aims to eliminate tariffs on 90% of the products traded within the continent over ten years. Increased continental trade could reduce the dependency on foreign markets such as Russia and Ukraine. According to the Trade Law Centre NPC, the AfCFTA is expected to increase African trade by more than 52% in 2023.
As the conflict in the Black Sea region continues to rage on, impacting global markets, African countries look to loosen their dependence on Russia and Ukraine, enhancing the continent's food security and promoting further agricultural trade in 2023.